Bob's Burgers has a beta of 1.2 and just paid a dividend of $1.50 that is...

Question

Question

Answer 1

Answer #1

Expected return = risk free rate + beta * market risk premium

= 3% + 1.2 * 8%

= 12.6%

price of stock = dividend next year/(Required return - growth rate)

= 1.5*1.05/(0.126-0.05)

= 20.72

choose A)

Answer 2

Similar Homework Help Questions

Dunder Mifflin has a beta of 1.8 and just paid a dividend of $1.50 that is...

Dunder Mifflin has a beta of 1.8 and just paid a dividend of $1.50 that is expected to grow at 7% per year for the foreseeable future. If the risk-free rate is 3% and the market risk premium is 6%, what should be the price of their stock in seven years? A. $26.18 B. $37.90 OC. $35.42 O D. $23.60
Paunch Burger has a beta of 1.2 and just paid a dividend of $2.30 that is...

Paunch Burger has a beta of 1.2 and just paid a dividend of $2.30 that is expected to grow at 3.2%. If the risk-free rate is 3% and the market risk premium is 6%, what should be the price of the stock? A. $69.81 B. $39.69 C. $32.86 D. $33.91
A stock with a beta of 1.2 just paid a dividend of $0.75 that is expected...

A stock with a beta of 1.2 just paid a dividend of $0.75 that is expected to grow at 7%. If the risk-free rate is 3% and the market risk premium is 5.5%, what should be the price of the stock in five years? A. $28.85 B. $43.29 C. $30.87 D. $40.46

Paunch Bruger has a beta of 0.8 and just paid a dividend of $1.25 that is...

Paunch Bruger has a beta of 0.8 and just paid a dividend of $1.25 that is expected to grow at 4%. If the risk-free rate is 3% and the market risk premium is 6%, what should be the price of the stock?
You find a stock with a beta of 1.3 that just paid a dividend of $1.45...

You find a stock with a beta of 1.3 that just paid a dividend of $1.45 that is expected to grow at 5%. If the risk-free rate is 3% and the market risk premium is 8%, what should be the price of the stock in four years? A. $22.03 B. $41.12 C. $20.98 D. $18.13
You find a stock with a beta of 1.3 that just paid a dividend of $1.45...

You find a stock with a beta of 1.3 that just paid a dividend of $1.45 that is expected to grow at 5%. If the risk-free rate is 3% and the market risk premium is 8%, what should be the price of the stock in four years? A. $20.98 B. $22.03 C. $18.13 D. $41.12

Kelso Corporation just paid a dividend of D_0 = $1.50 per share, and that dividend is...

Kelso Corporation just paid a dividend of D_0 = $1.50 per share, and that dividend is expected to grow at a constant rate of 6.50% per year in the future. The company’s beta is 1.70, the required return on the market is 10.50%, and the risk-free rate is 4.50%. What is the company’s current stock price?
Apple has a beta of 0.92 and just paid a dividend of 54 cents per share....

Apple has a beta of 0.92 and just paid a dividend of 54 cents per share. Its dividends are expected to grow at a rate of 11%. If the risk-free rate is 1.8% and the market risk premium is 14%, what is the fair price of a share of Apple stock
You find a stock with a beta of 1.3 that just paid a dividend of $2.30...

You find a stock with a beta of 1.3 that just paid a dividend of $2.30 that is expected to grow at 5.5 % per year. If the risk-free rate is 296 and the market risk premium is 7 %, what will be the price of the stock in seven years? A. $63.03 B. $117.66 C. $59.75 D. $43.33

What should be the price of a stock with a beta of 1.8 that just paid...

What should be the price of a stock with a beta of 1.8 that just paid a dividend of $1.25 expected to grow at 8% if the risk-free rate is 3% and the expected market return is 10%? O A. $17.76 OB. $56.82 OC. $61.36 OD. $16.45